Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/113722
Authors: 
Richter, Wolfram F.
Schneider, Kerstin
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5352
Abstract: 
The research on earnings determination is based on the Mincer-Becker assumption that individuals decide on schooling by maximizing income. This paper offers an alternative and less restrictive approach based on utility maximization. Using this approach, we analyze the efficiency of education policy in Ramsey’s tradition. Distortive wage taxation is shown to provide an efficiency reason for subsidizing education in effective terms. Second-best policy is confronted with empirical evidence for OECD countries.
Subjects: 
schooling choice and earnings functions
utility vs. earnings maximization
power law of learning
second-best taxation in Ramsey’s tradition
empirical evidence
JEL: 
J24
H21
I28
Document Type: 
Working Paper

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